Hancock Whitney Corporation (NASDAQ:HWC) Q4 2022 Earnings Call Transcript

John Hairston: I mean, to be fair, Chris, there are always dogs and cats that show up as rates continue to go up. And none of us really know what that ceiling is going to end up. But from a systemic viewpoint or a sector viewpoint, there doesn’t appear to be a dragon on its way due to rates or really due to any other strips. So, our confidence right now is pretty high, and we’ll have to see where we stand as the future. Part of the reason that loan loss reserve is sitting out there in is the desire to manage the ACL to about a 75% slower growth scenario with Moody’s. And if you look at the way our customers and our markets are behaving right now, they’re acting as if it’s going to be a soft landing. And I don’t know if that’s going to happen, none of us really do.

But when we build the ACL, the assumptions are a little bit more caustic, which keeps the ACL at a level that we think acts as sort of third base to the environment that we’re talking about. Does that make sense?

Catherine Mealor: No, it does. And just one quick related question back to the Moody’s baseline. So, you have the same weightings this quarter as you did last quarter. What would have to happen for you to shift to something higher on the slower growth as to go just from 75 to 80, just to pick a number?

Mike Achary: Chris, this is Mike. I think a little bit more conviction and certainty about a recession in the second half of the year. So, the Moody’s S2 scenario does call for a mild recession in the second half. And we haven’t weighted, we think, appropriately right now at 75%, which, by the way, we’ve kept these weightings in place for three quarters now. So we haven’t changed those. But I think, again, to answer your question, a little bit more conviction around a recession in the second half of the year.

Operator: Thank you. There are no additional questions at this time. I will pass the call back to John Hairston for final remarks.

John Hairston: Thanks to your effort for moderating the call, and thanks to everyone for your interest. We hope to see you all on the road over the next several months. Be safe and be healthy and take care.

Operator: That concludes today’s call. Thank you. You may now disconnect your line.